Consequential rectification of partners' assessments is valid where the firm's assessment is altered, despite wrong statutory citation.

Consequential rectification of partners' assessments was permissible where the firm's assessment had first been rectified. Section 35(5) of the Indian Income-tax Act, 1922 was construed broadly to cover correction of a partner's assessment when the firm's assessment or reassessment changed, and the reference to "assessment or reassessment" was not read narrowly to exclude rectification. Although the Income-tax Officer cited section 155 of the Income-tax Act, 1961, the incorrect statutory reference did not invalidate the action because the substantive authority existed under the applicable 1922 Act provision.

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Issues: Whether rectification of the partners' assessments, made to give effect to the rectification of the firm's assessment, was valid in law under the Indian Income-tax Act, 1922.

Analysis: The assessments of the partners had originally been completed under section 23(3) of the Indian Income-tax Act, 1922 on the basis of the firm's return. After the firm's assessment was rectified, the Income-tax Officer carried out corresponding modifications in the partners' assessments by issuing notices under section 155 of the Income-tax Act, 1961. The controversy was whether such consequential rectification had to be supported under the 1922 Act and whether section 35(5) of that Act applied. The Court held that proceedings for rectification in these cases could be taken only under the 1922 Act, but section 35(5) was wide enough to cover rectification of a partner's assessment where the firm's assessment or reassessment had been altered. The reference in that provision to "assessment or reassessment" of the firm was construed broadly so as not to exclude rectification of the firm's assessment. The use of the 1961 Act provision was treated as a case of wrong labelling, since the officer had the substantive authority under the corresponding provision of the 1922 Act.

Conclusion: The rectifications of the partners' assessments were valid and were supportable under section 35(5) of the Indian Income-tax Act, 1922 notwithstanding the incorrect reference to section 155 of the Income-tax Act, 1961.

Ratio Decidendi: Where a partner's assessment requires consequential correction because the firm's assessment has been rectified, section 35(5) of the Indian Income-tax Act, 1922 authorises the rectification, and an incorrect citation of the corresponding provision in the later Act does not invalidate the order if the authority to act exists under the applicable law.

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